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A Year of Multiple Crises: Russian war against Ukraine, extreme weather events, high prices for energy and fertilizer, food crisis had severe implications for food security and agriculture globally and especially in Sub-Saharan Africa. A Transformation of the food systems is needed.
Looking back at 2022, the year will probably be remembered as one of multiple crises. While the global economy was recovering from the COVID-19 pandemic, the world was hit by a new series of shocks. By the end of this year, it seems worth reflecting on the consequences and policy responses as well as daring an outlook into 2023.
A food crisis that already started before the war
In a situation where prices for food and agricultural goods were already high, Russia started its war against Ukraine in early 2022. Analysis from renewed research institutions such as the International Food Policy Research Institute (IFPRI) and AKADEMIYA2063 have shown that this war has amplified the increase in agricultural prices and inflationary pressures in the first half of 2022 and contributed to high volatility throughout the year. Although, the war has not caused the current food and fertilizer crises and cannot be held solely accountable for it, it augmented its effects. The increase in international prices for agricultural goods already started in 2020 and continued throughout 2021. Besides supply chain disruptions due to the Covid-19 pandemic, these price increases were driven by the impact of climate change as well as by political decisions of individual countries such as export restrictions, of land demand for biofuel and animal fodder production. Although signs of the current food crises started to appear already in these years, they caught the world by surprise and lead to severe price shocks.
Starting from an already high price levels, international indices that compare food prices over the year, such es the FAO Food Price Index, reached all-time highs for food products in the months March and April. This indicates the importance of Ukraine and Russia as exporters of basic food products such as wheat, maize, and vegetable oil for the international markets. It also reveals that international trade in important staple foods is highly concentrated on few big players, who secure the supply for many countries worldwide. Political reactions such as export restrictions on food products from both importing as well as exporting countries worsened the situation. Some importing countries especially in the Maghreb and Near East are highly dependent on imports of these products which constitute their main diet.
Agricultural prices throughout the year 2022 reacted very sensitively to any news of additional crises such as drought or flooding in any part of the world leading. At the end of 2022, international prices for food have decreased but remain on a very high level compared to previous years. Especially with the signature of the Black Sea Grain Initiative a sudden decrease of food prices could be seen. However, food inflation worsened over the year and stocks for many basic staple foods decreased compared to previous years according to IFPRI. IFPRI scientists also estimate that Latin American Countries such as Argentina or Paraguay might have the potential to make up for some of the lost exports from Russia and Ukraine. Here it would be necessary to put the policies in place to foster investment and export.
Fertilizer and energy prices decrease but remain high
Fertilizer as well as energy prices have decreased as well but are still significantly above pre-war levels. It is very difficult to increase the supply for especially these goods on short-term, since production and export are limited to a certain group of producer countries such as Russia, Belarus, or China for fertilizers. Especially low-income countries could suffer from a longer shortage in fertilizer supply and/or high prices for fertilizers. Scientists from AKADEMIYA2063 argue that a low affordability of fertilizers might lead to a reduction in the use of nutrients by especially smallholder farmers.
The African continent already now only uses far less fertilizer for its cultivations as compared to other regions. A further reduction could impact local yields and thus food security significantly.
Using alternative sources of nutrients, such as compost, is an option but are not available on a big scale everywhere and would not compensate directly and fully. However, some fertilizer producing countries such as Nigeria or Morocco might benefit from the current situation and extend their market shares. These countries benefit from natural resources necessary for a competitive fertilizer production and do already have existing productions plants.
An end of the war will not solve the crisis from one day to another – so what are the lessons learnt
Looking at the current situation, an end of the war against Ukraine would not solve the current food crisis. The scientists of IFPRI and AKADEMIYA2063 predict that 18 months will be necessary for markets to adjust after the start of the Russian invasion in Ukraine. Thus, it is most likely that prices for food, fertilizer and energy will remain on a high and volatile level and react quickly to extreme weather events or other shocks in 2023. Trade has played a critical role in helping markets to adjust and should remain open. Regulatory and administrative barriers that hinder transborder trade flows should be removed.
Regional trade is crucial to support local food security and resilience especially in dealing with local shocks and seasonal shortages.
For the production side, high prices and limited affordability of fertilizers are predicted to cause challenges to producers worldwide until 2024 and will probably contribute to a deteriorating food security situation especially in low-income countries. It might be necessary to secure the fertilizer supply of the most vulnerable countries and find mechanisms to finance fertilizer for smallholder farmers who have challenges to pre-finance these inputs. At the same time countries and production systems should reduce their dependency on imported synthetic fertilizers as much as possible by combining different production strategies for resilient food systems.
The need of evidence and data
As the current situation of multiple crises is complex and effects vary among countries, scientists and practitioners agree there is no ‘one size fits all’ or blueprint solution. Policy response should be evidence-based. However, decision-makers in many countries must deal with a lack of agricultural and economic data on e.g., local production and trade and can thus hardly estimate or predict the concrete implications of the crises.
It is of critical importance to improve the availability and quality of data from macro to household level to support evidence-based decision making in partner countries.
Solutions should involve short-term emergency aid were needed but at the same time invest in middle- to long-term transformation of the trade and agri-food systems to find a balance between trade and own productivity to achieve resilience against shocks that might occur more frequently in the future. Coherent and effective policy response in a crisis requires strong governance fundamentals. A lack thereof can be considered an additional obstacle in fighting the crisis.
The necessary transformation of the food and agricultural systems
While many countries are suffering from high prices and limited availability of certain goods, there are also winners, who might benefit from the geopolitical changes occurring. Especially countries with resources such as natural oil and gas or raw materials to produce fertilizer, among them Nigeria and Ghana, see windows of opportunity to attract new investments and save market shares. However, it is critical not to create another dependency based on the exploitation of natural fossil resources but invest strategically in sustainable green solutions. For 2023, the experts agree that it will be necessary to overcome the mode of crisis, in which governments and development partners are solely reacting and move towards creating forward strategies for future developments. In conclusion, they need to take into consideration the necessary transformation of food and agricultural systems.
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